Poker

The U.S. telecom landscape can get confusing. But I think we can all agree that technology is pushing forward and consumers will benefit by having more ways to watch the video content they want to watch in a simple way. And so if you’re a subscriber to DISH satellite TV service, it would be really nice to be able to stream the content you’re paying for to a smartphone, tablet or computer within your home or when you’re on the road.

The action going on between Sprint, Clearwire, Softbank and Dish Network is really interesting, and much like a game of poker. Let’s have a look.

Sprint is the No. 3 player in the U.S. market. Years ago this CDMA network operator acquired Nextel (and it’s push to talk iDEN network) to gain scale, hoping to consolidate all of these customers on one big future network. Unfortunately, Sprint hasn’t had the balance sheet strength that rivals AT&T and Verizon had.

What made Sprint interesting over the last few years was its investment in Clearwire, the country’s first true 4G wireless network operator. Sprint owns 51 percent of Clearwire as of right now and is currently attempting to buy the remaining 49 percent. For those who remember, Clearwire had very aggressive WiMAX plans and launched super-fast wireless data services in places like Chicago and Portland. But Clearwire ran into its own capital constraints, slowing it down. All the while, the market left WiMAX behind and it became obvious that Clearwire needed to adopt LTE instead.

Without a stellar balance sheet, how could Sprint buy Clearwire? That’s where Japanese operator Softbank comes into play. Back in October 2012 Softbank launched a friendly bid to acquire 70 percent of Sprint. This deal, which was pretty complex, gave Sprint the cash it needed to go after a full takeover of Clearwire. One of Clearwire’s biggest assets is its huge swath of radio spectrum. Combine Sprint and Clearwire and you have an incredible resource of spectrum.

Enter Dish Network and its well-known CEO, Charlie Ergen. Here we have a satellite TV company that has introduced some innovations like the “Hopper” ad skipping technology. But it’s still a company stuck in the old world of TV delivery. Charlie Ergen knows that Dish needs a wireless presence to stay relevant, and Charlie has his eye on Clearwire’s spectrum.

When Sprint (together with Softbank) bid to buy the rest of Clearwire for $2.97 per share, it forced Dish into action. They responded by raising the bid to $3.30, topping Sprint’s offer.  Remember Sprint is the majority shareholder of Clearwire.  But not wanting to piss off the minority shareholders, Sprint raised the Dish bid by a dime, coming back with a $3.40 bid.  Are you starting to see how this looks like a poker game?

Charlie Ergen didn’t back down. He came back this week with a full $1 raise on Sprint’s bid, upping the price to $4.40 per share. This is getting interesting! But what I haven’t explained yet is the alternative plan that Dish cooked up to interfere with the Softbank / Sprint deal.

You see, if Softbank injects a ton of cash into Sprint, then there is no debate Sprint can beat Dish in a bid for Clearwire. So what’s Charlie to do? Put in a bid for all of Sprint. Not just 70 percent of the company like Softbank’s bid, but the entire company. That’s exactly what they did last month. 

Dish and Sprint, together, would not be particularly well capitalized. Everyone knows this. That’s what leads most industry pundits to conclude that what Dish really wants is to make it difficult for Softbank to acquire Sprint (and therefore Clearwire too) without granting Dish some sort of network access deal.

Former Wall Street telecom analyst Jack Grubman explains it all quite well in this video interview with CNBC. 

So what’s going to happen in the end? Who knows. But I wouldn’t be surprised if the bidding for Clearwire kept going.  Spectrum has a lot of value and the wireless industry is still seeing huge growth. Softbank has deeper pockets than Dish, but Dish has enough power to push for a network sharing deal in return for backing away from table on its push to acquire Clearwire and Sprint.

 
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Stock Talk: Dish, Clearwire, Sprint, Softbank and the big game of poker

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I almost bought stock in 2011 when CLWR was less than $2 a share. Shaking my head!!! Its up over $4 now. Good thing I was super smart and bough FB last year.

I like your articles.
Why can't Sprint can't simply say "no"? Is it just because shareholders want to cash out? We keep seeing that Softbank is the best option, from a health standpoint. Why not just ignore offers from someone that is just trying to leverage spectrum by throwing money on the table?

What about Dish and Google's partnership? Google has deep pockets too, and could back dish so they could get in on the game too. Google is testing spectrum signals on their campus, and has shown a couple times being interested in the carrier game. But I wouldn't want to read that partnership contract because it would probably be like 10.000 pages long. And I believe it was said Google would be a silent partner and letting Dish run the company too.

I also wonder if Dish/ Google carrier is still on tract for opening by the end of 2013 like they predicted at the beginning of the year.

I'd love to see a Google carrier if they could implement their ideas for how its run, but I don't think Dish would fully embrace their ideas.

Not true- in just the past few months, the rollout started going live in my 1.7 million person area.

Sure, I wish it had been faster, but they are progressing.

Yeah there's one tower by the gas station I buy cigarettes from every other day. At least every other time I've gone I've seen people working on the tower. I flipped 4G on about a month ago when I first saw them working and lo-and-behold, I had LTE for once! It's slow and cuts out, but because it's not ready; when it does work, it works exceptionally well.

Are we talking about the same thing? As I understand it and as Sprint notes on its website: "Network Vision is Sprint's plan to consolidate multiple network technologies into one new, seamless network with the goal of increasing efficiency and enhancing network coverage, call quality and data speeds for customers across the United States. In addition to deploying a new 3G network, Sprint will roll out LTE nationwide."

Personally I've about reached my limit with Sprint. Network Vision was supposed to correct some really abysmal data speeds and voice drop-offs last December. It hasn't as of yet. From where I stand, 3G has always been terrible and 4G doesn't even come close to where I live. I've begun testing a GSM phone using a NET10 SIM Card and I like what I see. The pot is sweetened further with the knowledge that NET10 service costs about 50% less than Sprint.

The singular drawback for NET10 is that its data is capped at 1.5GB, but even Sprint's unlimited is useless if you can't find it or use it.

I've been gradually song more and more 4g in my area. I expect to have pretty consistent 4g throughout the Seattle area by end of summer. I've begun clocking some very fast data speeds.

@ro1224: Since you're considering switching to a GSM phone based operator, I would suggest you stay AWAY from STRAIGHT TALK & NET10 which are both owned by that Shaddy-ass Drug Lord Carlos Slim... I have heard only HORRIBLE stories about customers on STRAIGHT TALK & NET 10...I will be definitely switching to a GSM MVNO once I get the right GSM phone ( crossing my fingers for the X-PHONE !); CDMA phones are nothing but prison CELLS ( pun intended...) that lock you on either SPRINT or VERIZON...I'll NEVER make that mistake again..

I have no problem watching my dish content on my Evo lte, HP touchpad running 4.2.2, and my ancient laptop. I have also used my in-laws desktop to access it in another state. I don't see your statement as 100% true about streaming service.

Another cool thing about the hopper service is that if you have the main unit hooked up to your network then any joey(remote) unit acts like a network extension and can plug a switch into it and receive internet in that room. I stream HD video on my ps3 with one of the units.

The problem isn't that Dish allows you to stream content. The problem is that Dish allows you to stream content from their primary, legacy service: satellite tv delivery. That is what is going away, as it is clear to everyone by now that ala carte subscription, on any device, is the future. That future doesn't include satellite delivery, thus the attempts by Dish to become a mobile player.

Love seeing this going on. In the end Sprint has to be in a win win situation, more importantly its customers. Sprint can't make their visions come true without help. I just really pray at the end of this rainbow is a better network for Sprint and its customers. Yes I have LTE in Chicago, but its still slower and not as reliable as AT&T or Verizon. 3g on the other hand is still sub par, barely useful compared to everyone else. I love having LTE service but the hit it takes on battery life is hard to deal with. If Sprint could ever get their 3g service up to a solid 1 mb or better speed like its fellow US carriers many people would be so much happier. Sad when I have to wait minutes or flip over to LTE just to check email or view a few web pages. Only thing that still keeps me in Sprint's market is price and unlimited. Having 5 phones on my plan its hard to compare Sprint to any other US Carrier, even when you consider the thought of better speed. I'm trying to keep my faith in Sprint that they will eventually deliver a better service.

Interesting article! I personally don't want this to turn out as a win for Dish, especially considering the reports about the company. I agree with Paul; Sprint needs help with their network and this is a win-win situation for them.